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Chinese laws may push up labour costs

COMPANIES investing in China could face increases in labour costs after Beijing unveiled plans to tighten employment laws, improve their enforcement and make foreign investors recognise the official trade union.

Officials say the Communist Party leadership agreed last week to strengthen workers’ rights and guarantee collective bargaining as part of President Hu Jintao’s vision of a “harmonious society”.

The plans include restrictions on short-term contracts, protection against arbitrary dismissal, and the institution of collective bargaining to resolve issues from rest breaks to holidays and redundancy terms.

Some foreign businesses, with American manufacturers to the fore, have lobbied against the changes, complaining that they will push up production costs.

But Wal-Mart, the US retail giant, has already accepted the presence of the official All-China Federation of Trade Unions in its outlets.

To put labour costs in perspective, the manufacturing province of Guangdong has just raised minimum wage levels in its most